Evans-Pritchard Announces Fed Contemplating $5 Trillion QE Expansion

In his latest column, the Daily Telegraph's A. Evans-Pritchard does a good job of recapping all the various reasons why Bernanke has now completely cornered himself, and facing a newly collapsing economy, is left with just one recourse: the printing of more, more, more paper. This should not come as a surprise to anyone who has read even a few posts on Zero Hedge - the only response the Fed is left with as deflation accelerates, and as the Fed and the banking cabal refuse to do an orderly reorganization whereby financial firms grow into their balance sheets via a debt restructuring (and equity wipe out), is the spewage of more, inflation-stimulating, fiat. Ironically, as this newly printed and rapidly diluted monetary representation (because it increasingly is not equivalent to money) makes its way only and almost exclusively to those with direct discount window access, i.e., the mega banks (and for some ungodly reason, the clearinghouses soon), the assets that will be bid up are all tangible commodities, while secondary assets, which are contingent on a properly functioning reserve banking (money multiplier) system, collapse in a deflated heap of liquidations. Yet one notable section in AEP's post draw our attention: "Key members of the five-man Board are quietly mulling a fresh burst of asset purchases, if necessary by pushing the Fed's balance sheet from $2.4 trillion (£1.6 trillion) to uncharted levels of $5 trillion." We are very curious where the DT's reporter has found this information, since if it comes from a credible source this is a massive game changer, and while many have speculated this will happen sooner or later, to know for a fact that QE is definitely coming is major news, and, if true, we are stunned the WSJ's Jon Hilsenrath, who recently has had his ear "very close" to the Fed's internal process, has not reported on this yet.

Incidentally, the $5 trillion number was referenced previously on Zero Hedge in a post by RBS economist, and uber-realist, Bob Janjuah, as follows:

All that's now left, as I have said before, is for the Fed to shift to
a USD5trn or so new QE programme, likely in co-ordination with a bunch
of other central banks, which in total may give us USD10trn or more of
new QE. But this isn't happening until much much later this yr or, more
likely, next yr.

We agree with Bob: the next QE phase will most certainly not occur before the midterms, which as the recent abdication of a national budget demonstrated, are a critical priority for the administration, over and above the telegraphing of the country's catastrophic state to the general population, which is precisely what a nuclear monetary blast would be (let alone a new fiscal one - it is no incident that today, for the first time, a new $35 billion unemployment stimulus bill crashed in the Congress after it could not muster enough votes). Therefore, we are confident that the Fed has its hands tied well until December, although we anticipate a January lift off date for QE version 2 and final, which, as Bob Janjuah notes, will likely come in collaboration with every single central bank in the world, in one last (failed) reflation attempt: the final spasm for the Keynesian religion.

Al Gore was recently described as a "Crazed Sex Poodle" in this article at the Smoking Gun. The licensed masseuse reported that Al Gore repeatedly groped her and Frenched kissed her before pinning her to the bed and humping her like a"crazed sex poodle." Apparently all this talk about global warming, was causing Al Gore to over heat in the genital area, causing volcanic like eruptions from Al's penal member. The spew, subsequently dried on the licensed masseuse black slacks and is now considered evidence.
Al Gore was at Hotel Lucia, in Portland Oregon when this alleged sex crime took place over 2 years ago.
It is not the first time the Al Gore has been accused of such accusations. In fact his wife, Tipper, just left him in June for similar reasons. Tipper claims that she would routinely wake up to find Al humping her leg like a "crazed sex poodle."
"It was cute for a couple years when we first got married but it gets old after awhile" explains Tipper Gore.
Some are wondering if global warming itself has contributed to the sex crazed state of Al Gore or could it be, just all the talk of global warming has put a heavy undue burden on Al Gore, and the pressure has gotten to him. Or could it be just being rich and famous makes people feel above the law, legal or moral? This incident puts a crack into Gore's character, that is if he had any to begin with.
With something like global warming, where the verdict is still not in, and the debate rages on, we turn to experts and trusted politicians for guidance. When the head spokes person, for the movement, the man who invented the movement, turns out to be a crazed sex maniac with violent inclinations, we have to question weather we can trust this mans agenda with global warming.
I say, along with the Czech President, that the whole global warming thing is a fraud.
A fraud created to get more(total) control on the populace, while creating Ponza schemes (Carbon Tax Credits) to enrich the bankers again. In the end all will pay with new carbon taxes on everything. This will be the first elitist scheme to entangle the entire world and be executed from a single agency(institution). It is socialism with a green flag on it. Al Gore, and his obnoxious behavior is just a symptom of the attitudes of these elitist and their bogus science and paid experts.
Al Gore should check himself into Obama's "Behavior Modification program" for sex and for food. Or at the very least, call Tiger Woods, and get some recovery pointers.

It's not like Zimbabwe Ben didn't warn us. He told us that what he would do with the printing press. If a lunatic is constantly ranting about how he wants to shoot people and he is given a gun no one really should be suprised by the eventual outcome.

Interesting...Bernake as the Good Humor Man. In the summer of 2012 the popsicles will either be 5 cents or $500.00. Somehow I don't think Ben is going to make small change. Right now he's selling my favorite childhood flavor, Sky Blue.

The problem also for the Fed is that if they DON'T prevent GD II (which they can't) by attempting to hyperinflate, then they will be abolished and the banksters no longer given free reign to play with the monetary supply or interest rates, the mother's milk of the entire financial system. That and cities burning to the ground are probably good considerations when facing a deflationary depression scenario.

No. Not like that. Quite the opposite. Most news sources in the U.S. translate Ben's fedspeak in a manner that reflects positively on him, regardless of the fact that he's a monster who's going to wipe out the U.S. Ahmadinijad, on the other hand, has his words translated incorrectly and reflects poorly on him, regardless of the fact that he's not a monster, just wants to be left alone, is being constantly threatened by his nuclear armed neighbor, and is not a threat to the U.S..

Yeah, when Ahmadinejad says he wants to "wipe Israel off the map," what he *really* said was, "I want to wipe this smudge off my map," because hey, a guy's map gets dirty from time to time. But the scrofulous American press, which is manipulated from behind the scenes by greedy Jews following the Protocols of the Elders of Zion, always mistranslates "smudge" as "Israel." And it's very obvious that the reason this giant, oil-rich country (along with every other Muslim country) can't get its shit together is malicious conniving and plotting in a country smaller than most U.S. states a thousand miles away. It might seem crazy how a handful of sneaky Jews in a tiny little country can keep around 1 billion Muslims in poverty, but then you are underestimating how sneaky and conniving the filthy Jew truly is.

Like Ahmedimijad-a-ma-whatever saying Israel must be wiped from the face of the earth kind of thing?

When I was a kid in the 1960s I often heard that Kruschev said of America "We will bury you", which was interpreted as a threat. Then in the 1970s I studied Russian and found out that the expression means not to kill, but to out-live, as in "the old lady had buried 3 husbands".

So, unless you know Farsi (as you strike me as the kind of person who knows only English, and maybe some Hebrew), you have to take others' word for it, don't you? And the MSM would never mislead you, would it?

It doesn't matter to them. All profits of the Fed go into the Treasury. No one at the Fed is conspiring to hold a wealth of "assets" (the assets are all junk anyway). They're doing everything they can to keep the bonuses coming to their pals at Goldman Sachs.

Let me give you an alternative theory: Every head of every major industry believes the economy depends on his industry. It's just natural. For example, my father's a diesel executive. He's been in the diesel industry for almost 20 years and knows it inside and out. If you asked him, he'd say the country's health depends on his company staying afloat, and he'd mean it sincerely. Of course, if his company *does* go bankrupt, that's that.

Now, take the guys at the Fed and Treasury. Their whole lives have been high finance. Yeah, they're corrupt, but you're missing this other part--they truly believe that if Goldman Sachs goes down, the whole country comes down with it. It's not just propaganda. They really believe it themselves. Now, you take even the most pure-souled guy, if he's a true believer in the economy's absolute dependence on the profitability of Goldman, and give him the unlimited money-printing power of the Fed, what exactly do you *think* he's going to do?

The Dems do not understand what is happening. Frightening blithering babbling idiocy. Barney Frank is totally insane. I just watched him on C-SPAN, explaining that we're going to fight the financial meltdown with sharks and hats.

They don't have to do it before November. The mere TELEGRAPHING of their intentions before the mid-term elections will be enough to have the desired effect. Don't expect Obongo to do this dirty work: but wait for a hint from Vice-President Geithner or Secretary Bernanke...

I have known, sort of, what a quadrillion was when I was a kid (you know, the semi-nerdy ones who knew the ranks in the Army, etc.). Still, even with the size of our country, a quadrillion is a HUGE number. A million times a billion (American system).

If that were in FRNs, then the average amount of cash per capita would be an impressive $3,030,000,000 for each American! [all of these zeros makes it hard to calculate at 1:00 AM, so please feel free to check my math]

Do it Ben! Makes us all multi-billionaires! Those of us with any doubts will hold some gold, thank you.

Yup, the numbers check. But the Quad Bazooka would put Ben in the record books as the Caligula of Monetary Porn. It would also wipe away all the failed bank balance sheets, all the SIVs, unwind all the potentially toxic derivatives, unwind FNM/FRE/AIG, and the hundreds of lesser dependents on the Fed's largess. The Quad could wipe away the sins of the fathers and of the unholy banks, it could wipe the slate clean of all reminders of the folly of the last 3 decades. Psychologically that would be worth it to many Americans even if a stick of butter costs $25,000. Yes, one could say it would be worth its weight in gold :) Bring it on!

"Money money money. Who do you trust? Me? I'm giving away free money! And where is the Batman?"

He's dead.

"And now, here's the part where I relieve you - the little people - of the burden of your failed and useless lives."

Well played, Mr. Bernanke.

Really, the QE is mostly about shoring up political and corporate support. It's also a foreign policy tool. As we see with Germany, all major world nations are expected to inflate simultaneously to contain the damage to fiat purchasing power.

But some, at least, are resisting the call. Not everyone wants to live through a complete political collapse.

Try this. I'd bet my next paycheck that 99% of Americans couldn't do the following three things:

Find Iran, Iraq, and Afghanistan on an unlabeled map.

Spell the word "campaign".

Tell you the official name of the U.S. Central Bank.

Does that help?

You remind me of a story my mom used to tell. She was swimming on Jones beach and she was being pulled out by a rip tide. She was so far out she started to worry that she would be lost at sea, as she couldn't make out any people on the shore. She noticed a man also caught in the rip tide near her, so she yelled out, "sir, sir, please help me."

Most Americans are wholely part and parcel of the corruption. They are very heavily invested in it, and as much of the problem as are the Bankers.

You have obscene Pensions. Inane Housing prices boosted by cheap loans from the Feds. This constitutes the major asset classes of most Americans. Do you seriously think you're going to get them to change their minds when they are so heavily invested in this? That's one key reason why they keep electing leaders who promote the problem.

Wishing for the majority of Americans to come to their senses is like wishing for the Bankers to give up their bonuses. It's not going to happen willingly. And unless you understand the extent of the problem, you're not going to be able to understand why it's going on.

Sure, if you leave out the part where the socialists have held Congress for the past 4 years. And Barry was sitting in Chicago pushing the same thug-government policies.

Bush and Nancy teamed up to bring us a record-setting 400bn deficit.

Barry saw his 400, and raised him 1600bn.

Whatever he "inherited", he injected with steroids and handed a bag of crack. Don't pretend he's any different from the rest of the control freaks who ran Chicago into the ground. We're peons, anyone with a real career is the evil "rich", and his only solutions are ones that rob us blind, give the Anointed Ones more control over our lives, and buy votes with more dependency programs.

He's working off the Detroit (Newark, Baltimore, Philly, New Orleans) model.

He was a fucking Senator! If he had any good ideas why didnt he write a bill to really fix something back then? Hmmm?

McCain was no better. Both of them wandered around saying, "When I'm President..." Like they were holding back all of their really good, workable fixes until we gave them the presidency.

For better or worse, Obama is the President, his hand-picked guys run everything, and his allies control congress. Sounds like he's 'in charge' now. When you are in charge you get all the credit ... and all the blame.

Sorry, that's not going to be done. Inflation is debt repudiation. While you can do a little bit of it at a time, wholesale debt repudiation will cut you off from the Bond Markets.

That's just not going to happen, and anyone thinking that it is is just kidding themselves. There's way too much incentive to have access to those markets. Especially if you're heavily dependent upon International Trade just to survive (as in Oil).

Pour moi; definitely a prey. IL needs to rely on BABs [which most states/munis shun being they are taxable] to fund itself; and that may not be enough since every new BABs auction IL conducts necessitates IL offering higher and higher yields to find demand. MCDX is unfazed by the movements in IL and CA debt and CPDs [traders are idiots] with absolutely no volatility in either the index components, and the skew is so negligible that every arbitrage is basically a loss of time. NY is still fairing well due to its tax structure and the overall weight it has in the national GDP output, ditto CA. IL is toast since the revenue streams are either all put into servicing old debt or defined in GO BABs as revenue streams, thus serving a dual purpose only prolonging the inevitable. Unless FED decides to serve as a monoline for IL, while implicitly enhancing its overall credit rating or outright guaranteeing all IL bonds outstanding 100 c/$ IL will default. It can not play the spread as USA does nor can it pay IR using external revenue streams. GR, CA are n the same shape, but GR has an advantage that all of its debt outstanding is an unsecured debt; while CA and IL do not have such luxury. If indeed FED is trying to inflate its BS to 5T [10T] maybe expected both the monetization of muni bonds outstanding and all new issuances which will surely skyrocket in both the volume and the value if FED guarantees/buys back on the secondary market/agrees to use as a collateral in REPOs with financial institutions. The old rules about probability and distribution of default in muni bonds are no longer valid; we are entering into uncharted waters; and when the tide goes out; we will see who has been swimming naked this whole time.

You are way over my head Cheeky, but thank you so very much for the spot.

Yesterday, I had the priviledge of being given the opportunity to provide bail to an innocent man. I took it. It is one of the better things I have done in my life and maybe a way of of paying forward for the things I have done wrong in my past. Hopefully.

You are a great talent Cheeky and thank you again so much. Sincerely.

Irish bastard.

PS........I think when the CA and NY shit hits the public fan the pretense of the recent and sudden European findings of fiscal responsibility will be put into perspective.

On the inflation/deflation ad nauseum thing, what do you think of Gary North's hypothesis that the reason that the bailouts (broadly defined) have not much increased inflation is that the Fed is paying interest on excess reserves? If you accept this, can the Fed goose inflation merely by reducing or eliminating that interest?

Completely wrong. The fed will never buy a real asset. They will only buy liabilities and relabel them as assets.

Makes for a neat balance sheet. No matter how bad the fed balance sheet is, all they have to do is find a couple more electrons and send them out, and they are covered. They can even print the money to pay for the money that the Treasury dept prints. Ahh the joys of ink and electrons. Paper into gold, and computer screens into porn at the SEC.

There will be no one left to bid, which is why his inflationary policy is shear lunacy. He is single handedly destroying the market. What is the value of anything when more than 99% + have no money to buy anything? Everything becomes worthless when you are the only game in town. Its like jerking yourself off trying to get laid.

You might rather ask "who will want to bid on them?" After all, if they had real value, why did the Fed have to buy them? If the asset is worth (generously) 10 cents on the dollar, it will be easier for the Fed to keep pretending than to sell and realize the loss.

this move will ensure only 1 term for this obamanation of an aministration... tough call for ben.... definately political suicide... but he does truely believe it is the way to go... he has expressed that fact ad nauseum...

i would wonder if the admin can keep a lid on him until they feel as though they have secured their own re-elction aspirations... i am sure the power hungry politicos will let the economy suffer terribly, and let the stock market slide right back to the lows of 3/09 if it means they get re-elected...

the true powers that be... the private share holders of the US federal reserve bank... are watering at the mouth!... more intrest collected!... more debt for us slaves to service...

why can't i buy just 1 share!... oh, right... i have friggin morals!.. is there some proceedure to cut those out?... moralectomy?

I had a friend whose wife had a beloved sick dog. The dog had cancer. Bad. The vet looked at the husband and said, "we can give the dog a blood transfusion and that might work." $3,000 For two days the tail wagged, sparkles was happy and the husband go action. Day three, sparkles goes down. Sick. Very tepid tail wag. The wife says, "But the blood transfusion worked, I saw it. You saw it. Lets do it again, we must!" $3,000 This went on two more times. My friend was sick with senseless destruction of capital. The net? Bought Sparkles 3 weeks. $12,000 went to a vet. $12,000 left my friend. We are only delaying the inevitable, and destroying capital.

The final bazooka is a further $15-20T in both Europe and US in order to debase the currencies enough to take western workers purchasing power down to the same level as a chinese labourer. Then we'll get the deflationary depression.

Obama, Head of the UN Security Council "no nation can be above another".

But here's the thing: The Fed can't do this without political cover. Political cover can't happen without a panic akin to early '09. Thus, putting $2.5T on the line and dangling it in front of GS like a hambone at the dog track is a recipe for a market crash.

Liquidity is hardly going to kickstart the economy, I might hazard that deep, deep structural change would.. that's the unexpected outcome of starting a globe-sized war against the environment or whatever, a global denominator feels they have to have a change. ..this suggestion reminds of the saying, 'money for old rope'

Only partly true: non-event in terms of its effect on inflation. QE is a nuclear event in terms of shifting toxic and soiled assets from the private sector to the backs of taxpayers.

Karl Marx was wrong when he said of the income tax that "capitalism has devised the means of its own destruction". He should have been referring to central banking and QE.

Banks sell their used toilet paper to the Fed at par and use the money to buy Treasurys (since they cannot and will not lend) or keep it at the Fed as excess reserves. Congratulations, America -- you have just become poorer and deeper in debt.

It is a misnomer to call this disaster a credit crisis. The credit contraction was and is a symptom, not the cause. The cause was a crisis of confidence caused by systematic mis-pricing of risk, which is polite way of saying the borrowers and banksters were distorting the value of their assets via various gimmicks.

Confidence in the quality of the banks BS (Balance Sheet) was lost and confidence in the value paper money and its proxies began to deteriorate.

It would have been far better if BS (Ben Shalom) Bernanke handed out cash to consumers instead of stoking his bankster buddies with QE. Government is reactive and likes to treat the symptom (bank asset quality), not the cause (loss of confidence).

Of course, the best solution would have been to (a) let nature take its course and allow the stupidest banks and sleeziest borrowers to fail and (b) prosecute the fraudsters. By now, we would be well on the road to recovery.

It would have been far better if BS (Ben Shalom) Bernanke handed out cash to consumers instead of stoking his bankster buddies with QE.

What, waste a crisis? There's no crisis so bad that it can't be turned to the advantage of the having class. War, famine, oil spill, whatever.

The new money goes first to the haves. They spend it first, before the new cash has registered as higher prices. The last ones to receive this cash do so after prices have increased. Voila! Take from the poor and give to the rich.

Papa Ben is very proud to announce that mother Balance sheet is again pregnant. The new baby will be born within 9 monts and his/her (we don't know yet!) name will be QE10. I would like to warmly thanks HAL and SKYNET for their participation. Thank you so much.

Why not make it an even $100 Trillion while we're at it? After all, all you need to do is type up some numbers on a computer somewhere....unfortunately, real wealth does not come from making ledger entries...only its destruction.

It wouldn't matter if it's $1 trillion or $100 trillion. What difference does it make? At the end of the day people are unwilling to borrow the excess money even if you held a gun to their head.

QE (without fiscal stimuli, i.e. somebody actually spending the money) has very little if any effect on lending, inflation or employment. It's a non-event. A yawner. At some point Bernanke will understand that, too.

There is no Wizard of Oz, and there is no magically Helicopter Ben that is going to save anyone from the chaos that is coming.

At the end of the day, the system is toast, it hit it's peak and now must collapse.

"At some point Bernanke will understand that, too."

You mean.

"At some point the Lemming will understand that, too."

Unfortunately it does the Lemmings very little good at the end of the cycle, basically the Lemmings are getting hit with the Truth. The Lemmings are running from the Truth, that is what is going on.... well, the Truth can not be destroyed.

It's Ben's job to keep all Lemmings marching in the same direction as long and hard as possible, his job isn't to tell you there is an end to the road, his job is to convince all the Lemmings that the road goes on infinitely.

However, stuff like this will have less and less effect going into the future. Beating a dead horse to make him run faster is futile, but that is Ben's job. That is all they are, and all they could ever be.

The only thing the Fed can do is effect the edges and help to get the Lemmings marching in the right direction, unfortunately or fortunately the Fed can't extend the road to infinity. The only way QE works is if Helicopter Ben had unlimited power, absent unlimited power it just extends the game a little longer.

If you are a lemming you want to be one of the last to fling youself from the edge.

The first to jump are dashed upon the rocks. As the bodies start piling up their survival rate goes up slightly also, only to be crushed by the seemingly neverer ending supply of falling Lemmings. The fortunate ones come at the last, where, because of the dead and bloated bodies, they survive the fall, having a nice soft, albeit smelly landing.

Of course it has an effect. In this case, it's being used to allow zombie banks to continue consuming economic resources when they should be failing. And have you noticed that, while "people" might not be willing to borrow more, the US Treasury most certainly is?

I reiterate that they have no idea whatsoever to do at this point. The fact that nothing has been reinflated aside from the stock market (via manipulation, low volume markups and the greatest short squeeze in history) I cannot see them believing a 5 trillion dollar QE or any other kind of stimulus will do anything aside from buying a year at most since the core issues still have not been addressed.

The only and I do mean only logical explanation for this would be an attempt to allow the elites to raid the treasury in order to buy time to get their own house in order as 25% unemployment bares down upon us and the citizens turn outright "menancing" toward the establishment. There will not be anywhere near enough nifty gadgets or tard TV to quell unrest as American citizens become increasingly poor while Wall Street lives behind the moat. These men are animals and unfit to have any position of power in this nation.

"These men are animals and unfit to have any position of power in this nation." If we saw the greed and desire for power in their hearts, they would be unrecognizable as human, I also assure you.

They cannot count on the military protecting them - Stanley made that clear. You might look at his resignation as an opening salvo in that breakaway process where the military openly questions the authority of insane civilian "leaders" hellbent on madness.

Ben knows more QE will not solve the long term problems. Wall St/DC are playing for one more day in the sun...One day at a time. There is no long term planning that I can see no matter how I look at the world economy...except eventual default.

The West, or most of it, is addicted to cheap credit. The majority of those that were not thrifty are already howling for more cheap credit and they have suffered little compared to what is coming.

Get plenty of pop corn, hard assets that are difficult to find/tax, sit back, watch the show...there is nothing that we can do about their 'plan' when our elected representatives no longer represent us. When the world economy collapses the Keynesians will be in hiding. Most of the world will revert to barter economy until some commodity backed currency can be established.

One question: Will Angela Merkle go along with this plan or dump the Euro, return to DM, and stick with austerity? This plan of Ben's will force Germany into closer ties with Russia for access to oil/gas...imo. Real production based economies need real commodities not ever cheaper fiat currencies.

You forgot U.S. Treasuries. Really, ~5% on a 30-year? Who the hell thinks that inflation's going to stay below 5% for the next 30 years? No one. So why is anyone buying 30-years at 5%. The real bubble's in government bonds, friend, and it's a dogma at the Fed that the worst possible thing that could happen to a country, worse than hyperinflation, is for the government to not pay off its rent-seekers with the hard-earned coin of its citizens.